The available-for-sale method (market value method) of accounting for long-term investments in stock should be used when the:

Question

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The available-for-sale method should be used when the investor has little or no influence on the investee, as it reflects a passive investment in the stock. If the investor owns more than 50% of the investee's stock, the consolidation method should be used. If the investor has significant influence over the investee's operating decisions and policies, the equity method should be used. If the investor is a parent company, the consolidation method should also be used.

The Available-For-Sale Method (Market Value Method) of Accounting for Long-Term